URA to Crack the Whip on Noncompliant Commercial Car Owners

In shortThey are expected to pay registration and transfer fees, Income tax and tax on salaries and other allowances or benefits paid to their employees. They are also expected to pay Value Added Tax (VAT).

Taxes from the transport sector continue to decline despite a significant increase in the number of commercial vehicles across the country, Uganda revenue authority reveals.

The tax body blames the downward trend on the failure by commercial vehicle operators to file tax returns. "The owners of these commercial vehicles are expected to pay taxes based on the incomes generated from using the said commercial vehicles," Silajji Baguma Kanyesigye Assistant Commissioner Compliance Management, URA told URN.

They are expected to pay registration and transfer fees, Income tax and tax on salaries and other allowances or benefits paid to their employees. They are also expected to pay Value Added Tax (VAT).

Such vehicles, according to the URA classification are goods vehicles like trucks and passenger vehicles like taxis, tours and travel vans and buses.

For instance, according to URA estimates, a 14 sitter commuter taxi has daily income of Ugx150, 000. On annual basis, the income totals to Ugx39.6m. The estimates indicate that the commuter taxi owner should at least pay a minimum of Ugx1.2m on that income.

"URA has been working on transport sector for as long as income tax law has been in place. We are just re-echoing our resolve to handle the informal sector where transport is one of major sub-sectors," Kanyesigye points out.

It is the informality of this sector that makes it rather complex for URA to effect compliance in collection.

According to the Income Tax Act (Section 134), commercial vehicle owners are supposed to have a Tax Clearance Certificate, which according to Kanyesigye is an obligation. That has not been the case according to URA's own admission.

"URA acknowledges existing challenges such as the informal nature of ownership, and is thus going to engage all stakeholders in the business of transportation educate and remind them, as taxpayers, of their rights and obligations and ensure they comply," he wrote recently in a column.

As a result, URA has written to about 2,000 commercial vehicle owners reminding them of the obligation to be tax complaint.